Following several months of market speculation, CounterpartyLink has been sold by parent Cicada Cos to a group of investors led by Andover Capital, part of the Zurich-based specialist fund Investors Guaranty Global Alliance (IGGA). The deal places CPL among a number of financial content and technology investments already owned by IGGA and the Investors Guaranty Fund (IGF) behind it, providing a raft of potential technology partners, sales channel partners and sales prospects.
According to CPL CEO Christophe Lammersdorf, the company will benefit from its new corporate home in a number of ways. To begin with, the IGGA/IGF gives CPL more financial and global reach than it had previously; IGF is a Triple-A rated fund and has substantial operations in the insurance and reinsurance industries.
Second, IGGA/IGF – and its clients and the companies it invests in – represent both a potential client base for CPL’s counterparty data offerings and a sales channel for its product.
Finally, Lammersdorf says, the group’s portfolio of technology companies, including the likes of New Zealand-based Idiom, are also potential partners as IGGA/IGF attempts to pull its various properties into a coherent offering for its own client base.
CounterpartyLink was founded in February 2005 as part of the Cicada group of companies, which itself is funded in part by IGGA/IGF and whose Cicada Risk operation was spun out the IGGA/IGF in an earlier transaction.
CPL provides global legal entity data and counterparty data required by financial institutions that seek to meet their Know Your Customer (KYC), credit risk management and other regulatory obligations. The company maintains a series of data collection and cleansing centres globally. Data is collected from primary sources such as registration documents. It is verified using quality assurance procedures and continually updated to reflect corporate actions and other events impacting the data.
Terms of the transaction weren’t disclosed, but following its acquisition, CounterpartyLink intends to expand its product range. Planned improvements include the provision of detailed client data audits and customized data collection services. Additionally, CounterpartyLink has begun licensing its legal entity data workflow processes to its clients.
These workflow processes draw upon the legal entity version of Cicada’s Composer platform, for which CounterpartyLink now acts as a distributor. Using this capability, clients will be able to research and manage sensitive or high-risk client and counterparty records in-house.
This alleviates the need to divulge the identity to any third party of subjects that need to be validated. Clients will also be able to supplement their internal research with data from CounterpartyLink on any legal entities required.
CPL is now funded fully by IGGA, which invests in, operates and develops technology solutions, services and content in financial services, financial data and risk applications, specialized business technologies and media. The company maintains its headquarters in Zurich and offices in Toronto, Bermuda and Auckland, New Zealand.
IGGA describes its strategy as “to bring together all (of its) company investments into a risk, performance and compliance oriented group offering products and services that are at the forefront of financial information technologies supporting the global financial services industry, exchanges and regulators.”
The group says it already has substantial specialization in credit, valuation, performance measurement, counterparty risk, financial data integrity, real-time data distribution, simulation and modeling and financial software systems. IGGA is the vehicle through which Investors Guaranty Fund (IGF) invests in, operates and develops its technology solutions, services and content. IGF owns global patents on insurance securitization and various financial structures. The fund operates its proprietary risk transfer and loss mitigation technologies through three wholly owned Bermuda-based insurance subsidiaries.
For Cicada, the decision to sell its stake in CounterpartyLink will allow it to focus on its core activities, namely providing software solutions for real-time and reference data management, algorithmic trading infrastructure and Know Your Customer data compliance.
Cicada and a group of private investors provided the original capital for CounterpartyLink, launching the company and its first set of product offerings in 2005. The Cicada investment had also included helping to develop and implement the initial infrastructure and data collection processes used by CounterpartyLink in its global data centres.
Cicada says the Andover purchase offer represents “a compelling return on investment” for the Cicada group.